IBISWorld Market Research
The NBN continues to shape the future of the industry.
Melbourne, Australia (PRWEB) September 28, 2013
Whether they own the telecommunications infrastructure or not, companies in the industry provide retail internet services. Revenue is derived from the provision of internet services to consumers, business and government. In 2013-14, the Internet Service Providers industry is estimated to generate $5.8 billion in revenue. Internet service providers (ISPs) have historically been one of the fastest growing industries in the technology sector. In the past five years, broadband's market share is forecast to have jumped to 96% of fixed subscribers. However, IBISWorld industry analyst Kosta Lev states “market saturation for fixed broadband has led revenue to flatten over the period.” Revenue is beginning to pick up pace again as new technology gets upgraded. Over the five years though 2013-14, annualised growth is expected to be 1.8%.
The industry has undergone significant consolidation over the past five years. The importance of scale and exposure have meant that operators have become much larger. Smaller players have either been forced to exit the industry or make acquisitions to keep pace with the top players as they slash prices to maintain market share. Over the next five years, the industry will primarily be characterised by the development of the National Broadband Network (NBN) project. As access providers, ISPs are likely to grow strongly over the next five years as subscribers choose to upgrade connections, particularly as internet use continues to increase.
The Internet Service Providers industry is characterised as having a high level of market share concentration. The industry’s major players are Telstra, iiNet, SingTel Optus and TPG Telecom. According to Lev, “the industry is extremely capital intensive, and as such, there has historically been little threat of any company creating a network to rival Telstra's copper PSTN network.” Telstra has been able to leverage its dominance of the wired telecommunications market by bundling services. The high-fixed cost nature of the industry has encouraged a spate of merger and acquisition activity within the smaller ISPs, as they strive to attain economies of scale that will enable them to compete with Telstra. TPG Telecom and iiNet have shown the largest growth in industry market share as a result. Further consolidation is expected in the next five years, which will push the industry's concentration higher. However, the Australian Government's NBN plan is designed to increase competition within the entire Australian communications sector. For more information, visit IBISWorld’s Internet Service Providers report in Australia industry page.
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IBISWorld industry Report Key Topics
Companies in this industry provide internet access via fixed lines to businesses, households and government. Internet services are provided via dial-up, integrated services digital network (ISDN) and fixed broadband connections. This industry also provides internet reliant telecommunication services such as voice over internet protocol (VoIP).
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